Is The Recession Responsible for Reducing the Growth of Medical Care Spending? Evidence from Household Data

The growth rate of medical spending in the United States has experienced a marked slowdown in recent years. It is unclear whether this is due to the recent recession, structural changes embedded in the Affordable Care Act or other factors. Studying the impact of the recession on medical care use and spending at the individual level will provide insight on this question. We use data from the Medical Expenditure Panel Survey Household Component (MEPS-HC) from 2007 to 2013 together with state and county measures of economic activity to analyze quarterly medical care use and spending. We examine each of the following categories: hospitalization; emergency room visits; ambulatory medical visits; home health visits; and prescription medications. We separately examine spending by source, including total vs. out of pocket spending. Our method of analysis follows the literature on the impact of the macro economy on health: we examine how changes within state or county over time in our key independent variables (state or county level unemployment rates) affects medical care use and spending. Our findings suggest that recession is unlikely to be the major reason behind the slowdown of medical spending in recent years.